Driverless cars are only going to change just about everything

Much of the autonomous vehicle phenomenon has been focused on the technology's cool factor, but the implications of successfully putting driverless cars on the road are farther reaching than many realize

Gothenburg is a charming university town on the southwestern edge of Sweden’s North Sea coast. It’s also the Scandinavian country’s second-largest city with a population of more than 500,000 and a robust network of public transit options that allow the city’s residents to navigate what the municipality estimates to be, on average, a 30-minute commute to schools and workplaces.

But by 2017, Gothenburg’s predominantly 19th Century landscape will have a very modern addition — namely the introduction of 100 self-driving cars made by Sweden’s revered safety-oriented automaker Volvo.

Dubbed the Drive Me project, the initiative — jointly funded by Volvo and the Swedish Transport Administration — was announced in December 2013 with an aim to allocate 50 kilometers of public roadways to the pilot project with the overarching goal of reducing traffic fatalities in the Nordic city.

If you have a car that can drive away, you can have less parking, and we can focus the main areas on humans and their needs

The concept of driverless cars cohabitating with human-controlled vehicles was greeted with an equal dose of cynicism and celebration — much like Google’s announcement last month that it too would be piloting a fleet of 100 autonomous vehicles.

While the concept of cars driving themselves using sensory technology, sophisticated algorithms and self-guided, wireless communication has generated a flurry of buzz in the tech and automotive communities, many observers are beginning to look past the vehicles’ cool factor with the realization that growing adoption of driverless vehicles will have not only a profound impact on driver safety and accident rates, but on everything from the greater economy, energy use, the real estate market, urban planning, national productivity levels, and household dynamics.

Marcus Rothoff, autonomous driving program director for Volvo in Sweden, foresees a time when the precision and finesse of driverless vehicles will drastically change Gothenburg’s landscape by allowing for narrower lanes to be added to existing roadways, tunnels and bridges. Such changes are only the tip of the iceberg, and are likely to influence how the municipality spends its infrastructure dollars.

“We could spend money much more efficiently and that’s why we have the Swedish Traffic Administration involved in the project because they see the possibility of spending money much more efficiently.”

And it goes far beyond roadways and bridges. Mr. Rothoff envisions a time when driverless cars drop off individuals at their destinations in the city and drive themselves away to the city’s periphery where they await being wirelessly called back. Such a scenario would free up valuable urban space being occupied by parking structures.

“If you have a car that can drive away, you can have less parking, and we can focus the main areas on humans and their needs,” he says, adding that aesthetic changes such as the elimination of parking signs would likely occur, as well.

“Some estimates show that in city centres, almost one-third of traffic is driven by people driving around looking for parking spots,” he says. “You have this possibility of reducing congestion tremendously, which implies savings of time, savings of gas, but it also implies a bunch of secondary effects you might not think of.”

Mr. Mui also predicts the concept of car ownership itself will shift from one in which individuals purchase or lease their own vehicles to one in which they share the cost of ownership or forego ownership altogether in exchange for on-call driverless car services.

“What happens if, instead of being parked [at my work], it goes off and drives someone else while I’m not using it for 10 hours?” he asks. “Or, what if I don’t even drive the car, but just get a driverless taxi to come get me every morning and take me to work, and come back and get me when I need one? You start shifting from single use to shared use. Then the possibilities get really crazy.”

The director of business consultancy Devil’s Advocate Group points to a study conducted by the Earth Institute at Columbia University that showed the cost per mile of driverless taxis in Manhattan would be about 80-85% less (50 cents per mile versus four dollars) than yellow cabs simply by eliminating the labour costs.

Such cost efficiencies exponentially increase the viability of autonomous car-service programs and along with them the very nature of how vehicles are insured and who is liable for damages when accidents do occur.

“Liability will still exist, it’s just that it’s going to shift from the driver to either the manufacturer of the vehicle or the software developer, or the communications-interface infrastructure,” says Robert Tremblay, research director at the Insurance Bureau of Canada.

Mr. Tremblay describes the introduction of driverless cars as a “sea change” for society. “There’s a whole host of issues that haven’t been explored, like who would benefit from having the data of millions of people’s driving patterns. That data, on an aggregate level, has lots of value. Who does that belong to? How is your privacy being protected? It’s quite mind boggling when you start to consider the details of what can arise from this.”

He notes insurance companies haven’t quite begun discussing how they might be affected by the emergence of autonomous-vehicle technology, a trend Mr. Mui finds worrisome. “Insurance companies make money on their premiums, and over time they’ll be fighting over a smaller pool,” says Mr. Mui. “That will have a massive impact from a business-model standpoint, but it will also have an impact on hundreds of thousands of jobs for people sitting in claims centres, answering phones.”

The employment impact of the emerging technology goes far beyond taxis and insurance call centres. It has the potential to change the very nature of jobs in everything from transportation and logistics and public transit to auto body repair, car sales and service and crossing guards. It could reduce or eliminate the need for traffic enforcement, freeing up police personnel to tend to less mundane matters. It could reduce the pressure on emergency rooms, allowing doctors and nurses to spend more time with patients and liberate healthcare dollars that could be used for in-patient or long-term critical care, or research.

What I say to executives is you have to hedge your bets

Then there are the physiological and overall economic effects. Aging Baby Boomers, who would typically have to forego the liberty of independent travel after a certain age, would be able to get around on their own without worrying about poor eyesight or slow reflexes, improving their quality of life and likely their longevity. This would have profound implications for current pension-plan sustainability, the availability of spaces in long-term care facilities and costs to the healthcare industry.

Workers could not only reduce the length of their commutes by leveraging the travel-efficiencies inherent in autonomous-vehicle technology, they could spend their commutes working, which would increase productivity, and serve as a boon to the organizations for which they work and the economy as a whole. Some industries will grow obsolete while others will become integral to quality of life.

As Mr. Mui points out, just how well today’s businesses fair with the advancement of driverless cars will depend entirely on their ability to tackle the issue head on.

“What I say to executives is you have to hedge your bets. This may be the worst thing in the world for you, or it may open up opportunities that you may not have anticipated yet. But the only way you’ll know is if you suspend disbelief for a moment and really dig into what the possibilities are on the positive side and on the negative side, and make sure you understand what are the markers that will tell you how this is progressing along the way.”